Paris Company purchased equipment on January 1, 2009, for $25,000. The estimated useful life of the equipment

Question:

Paris Company purchased equipment on January 1, 2009, for $25,000. The estimated useful life of the equipment is five years, the salvage value is $5,000, and the company uses the double-declining-balance method to depreciate fixed assets.

a. Provide the journal entry assuming the equipment is scrapped after three years.

b. Provide the journal entry assuming the equipment is scrapped after five years.

c. Provide the journal entry assuming the equipment is sold for $8,000 after three years.

d. Provide the journal entry assuming, at the end of the fifth year, the equipment and $28,000 cash are traded in for a dissimilar asset with an objectively determined FMV of $30,000.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...